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Green Real Estate Law JournalDiscussing current issues in construction and real estate law as they relate to sustainability, from the perspective of owners, builders, and design professionals. Published by Stephen Del Percio, B.Eng., J.D., LEED AP.

Tag Archives | green building liability

In September of 2008, the Board of Directors of the National Institute of Building Sciences (“NIBS”) assembled a Task Group of design professionals, builders, and its own staff members to review third-party building performance rating systems and associated individual accreditation programs currently in use across the United States. The Task Group identified twenty systems and programs and interviewed representatives from AIA, ASHRAE, BOMA, GBI, NAHB, EPA, USGBC, and Victor O. Schinnerer & Co.. among others, in compiling its “Report on Building Rating and Certification in the U.S. Building Community,” which was released last month.

Back in 2007, the Energy Engineering Program at the University of Massachusetts Lowell completed a study of the actual energy performance of 19 green buildings across the Bay State. The study was funded by the Massachusetts Renewable Energy Trust and identified 13 schools which were certified under the LEED-based Massachusetts Collaborative for High Performance Schools Criteria, as well as 6 buildings that had earned LEED certification. The study compared energy consumption as predicted during the design phase and actual occupancy post-construction; buildings included in the study provided at least one year of occupancy data. The authors also interviewed individual project teams and energy modelers and conducted occupancy surveys in evaluating the effectiveness of various types of efficiency measures. All of the buildings received design or construction grants from the Massachusetts Technology Collaborative, which provided the prediction data that project teams had submitted in connection with their funding applications. Although the study concluded that these 19 green buildings were consuming (on average) 40 percent more energy than predicted, all of the buildings were consuming less than a building designed to Massachusetts baseline building codes. The disparity in predicted versus actual energy consumption is probably not surprising, but the study did identify a number of issues common across the buildings which resonate with many of the technical and operational provisions of documents like the Model Green Lease. I think it is therefore worthwhile to review the study both from a green leasing perspective, but also in terms of LEED, particularly because the Lowell study has not been referenced in many of the recent articles discussing the ongoing LEED performance gap.

As the Waxman-Markey climate change legislation heads to the Senate, I think it’s important to note that, as currently drafted, the bill includes provisions that could impose the types of energy efficiency mandates which NAIOP argued against in its controversial report that was released earlier this year. Section 201 of the American Clean Energy and Security Act (H.R. 2454) would first set baseline standards for all commercial (ASHRAE 90.1-2004) and residential buildings (the 2006 IECC code) and dates for certain percentage reduction targets in energy consumption over those baselines. The Act would require an immediate 30 percent reduction over those baselines once enacted (likely in 2011 or 2012 if the bill proceeds through the Senate and is implemented as drafted), followed closely by a 50 percent reduction by 2014 for residential buildings and 2015 for commercial buildings. The reduction mandate would increase by 5 percent every 3 years through 2029/2030 for a total reduction of 75 percent over the baselines. However, the Department of Energy would have the ability to increase or decrease the reduction targets based on technological feasibility. Section 201 further obligates state and local governments to adopt the codes, or their own codes that meet or exceed the established targets; the federal government itself will enforce the national codes if state and local governments fail to comply. If you recall the comments from NAIOP President Thomas Bisacquino in the aftermath of the uproar created by the NAIOP study, Waxman-Markey may ultimately create the precise scenario that NAIOP and its constituents feared: 30 to 50 percent reductions over ASHRAE 90.1-2004 in the short-term.

Many commentators suggest that, as a threshold issue, a green lease include an “environmental performance objective,” or a clause that requires both landlord and tenant to operate the demised premises pursuant to a set of very general, aspirational green building objectives. Upon reading a sample environmental performance objective clause, you may be reminded of the form language in the 2007 version of the AIA’s B101 Owner Architect Agreement, which obligates the architect to make a set of very vague and non-specific green building-related recommendations to the owner with respect to certain aspects of its proposed design for the project. While provisions in a lease that set forth a roadmap for landlord and tenant to operate demised premises in a sustainable manner should by no means be discouraged, it is important for landlords to carefully consider the specific language that they may choose to insert into a green lease as part of such clauses.

In a piece that appeared both on her blog and at Greener Buildings, my colleague Shari Shapiro opines on why, as we rapidly approach the midpoint of 2009, there remains a dearth of reported lawsuits arising out of green building projects, despite much commentary suggesting the contrary to be imminent. Ms. Shapiro suggests four reasons: (1) a relative lack of green building practices generally as compared to overall construction; (2) owners who are “too afraid” to measure building performance and are thus unable (or unwilling) to assert a claim arising out of violated green building expectations; (3) a general reluctance to engage in costly litigation given the economic downturn; and (4) the green building movement’s relative infancy. However, over the course of 2009, and notwithstanding the lack of lawsuits filed to date, there has been an explosion in commentary on green building litigation across the legal community. Accordingly, I thought Ms. Shapiro’s piece was particularly timely and worthy of some additional discussion here at GRELJ.

Green roofs have been a part of building for over a thousand years. The current green building movement has, however, had the greatest impact on the growth of the green roofing industry. A green roof is commonly defined as a roof that consists of vegetation and soil, or a growing medium, planted over a waterproofing membrane. There are two basic types of green roofs: (i) an extensive roof, which has a few inches of soil cover; and (ii) an intensive roof that has two feet or more of soil for a variety of grass, trees, bushes and shrubs. Green roofs are used in a multitude of buildings, including industrial facilities, commercial offices, retail properties and residences. The benefits of a green roof include reduced storm-water runoff, absorption of air pollution, reduced heat island effect, protection of underlying roof material from sunlight, reduced noise, and insulation from extreme temperatures. A green roof can thus be a critical design element for a green building. As more properties across the country are attempting to obtain LEED certification, it is worth noting that a green roof can help a property obtain over a dozen LEED credits, including credits for reduced site disturbance, landscape design that reduces urban heat islands, storm water management, water efficient landscaping, innovative wastewater technologies and innovation in design. The increase in green roofs and the green building movement is also resulting in an increase in liability resulting from errors in the design, installation or maintenance of green roofs. As a result, owners, design professionals and contractors should carefully consider ways to mitigate the potential risks involved with building a green roof.

As you may know, USGBC’s LEED v3 program launched this past Monday, April 27. Project teams currently pursuing LEED certification under any of the Version 2 programs can opt into LEED v3 for no additional registration fee through the end of the year. The Version 2 programs will be available to project teams for registration until June 26; after that date, all projects must proceed with registration under LEED v3. LEED v3 is comprised of what USGBC calls “LEED 2009″ revisions to the suite of LEED rating systems (other than Homes and Neighborhood Development, which are not changing under v3), a new online interface for project teams, and a shift in the administration of the LEED certification process to the Green Building Certification Institute (“GBCI”). USGBC calls the LEED 2009 credit revisions “a reorganization of the existing commercial and institutional LEED rating systems along with several key advancements.” The revisions contemplate harmonization (i.e., credits and prerequisites are consistent across all LEED 2009 rating systems), credit weighting (i.e., greater emphasis on energy efficiency), and regionalization (up to four bonus credits for projects that address a local environmental issue of import). Although they are important to review for background purposes, the thrust of this article is not to detail the mechanics of the LEED v3 program. Rather, a number of the new minimum program requirements (“MPRs”) present some novel legal issues for project teams- and their attorneys- to consider in connection with drafting construction agreements or leasing documents in connection with LEED v3 projects.

In early March, USGBC released a white paper titled “The Legal Risk in Building Green: New Wine in Old Bottles?” The eight-page paper, which was presented as a panel discussion between four attorneys, concluded that “[p]erhaps surprisingly, in light of the increased attention in seminars and workshops . . . much of the discussion among the attorneys [in the paper] suggests that many of the legal theories advanced in those venues to suggest novel liability associated with building green are, instead, simply new wine in old bottles.” While the paper does not appear on the USGBC’s web site, it was circulated by individual chapters; I accessed a copy through our New York chapter’s weekly email blast and have included a link to download the paper from the USGBC-NY homepage below. I applaud USGBC for taking a critical step towards acknowledging the liability implications of green real estate development and construction, but do think it is important for attorneys practicing in this space to digest the paper’s conclusions. Although the paper does identify and discuss many important legal issues, I think that it ultimately falls short of elevating the analysis of such issues to the level necessary for legislators and stakeholders to make completely informed policy- and project-related decisions. Specifically, by suggesting that “[c]onjecture, anecdote, and even rumor swirl around recent presentations, workshops and discussions circling the question of what legal claims may be based on the design, development, and construction of sustainable buildings,” the paper seems to be an effort to sweep many of the thornier legal issues that may indeed ferment into “new wine” under the rug.

Washington State’s High-Performance Public Buildings Act requires LEED Silver certification or a design that complies with the state’s Sustainable School Design Protocol for schools larger than 5000 square feet. In a video describing the benefits of green schools that is available on the State Superintendent of Public Schools’ web site, certain claims are made about the promise of “clean, high-performance, money-saving schools” that are “a wise business choice for cost conscious schools. Relatively small increases in design and construction costs, usually less than 2 percent, ultimately bring 10 to 15 percent reductions in long-term operating costs.” The folks at KING 5 television in Seattle caught wind of these claims and decided to do some digging; you can view the station’s full report through the link at the bottom of this article. As you might guess, the station concluded that the state’s claims about green building premiums, decreased operating expenses, and higher student test scores were highly exaggerated.

Back in January here at GRELJ, I critiqued Andrew Burr of CoStar’s list of the top ten green building stories from 2008 by noting his lack of any reference to the green building litigation and associated risk management issues that began to emerge during the course of last year. Accordingly, I was pleased to see his recent column acknowledging some of the risks inherent with marketing green buildings, both in project-specific materials as well as securities disclosures. In Mr. Burr’s piece, both Paul D’Arelli of Greenberg Traurig and Brian Anderson of Whyte Hirschboeck Dudek (who describes the securities issue in detail in his Understanding the Business of Green article, available via the links below), among others, note the importance of educating owners about the terminology associated with the LEED certification process and the potential legal dangers of misrepresenting a property’s green design features in terms of ultimate building performance.